Chancellor Gordon Brown has been warned his Budget tax changes threaten to drive foreign banks out of Britain.

Angus MacLennan, chairman of the Foreign Banks and Securities Houses Association, said the move could see the "destruction of the best industry in the UK".

If we are going to get a really good health system we have got to pay for it Patricia Hewitt Trade Secretary

The fears follow business worries about the penny hike in National Insurance a tax on jobs as industry leaders continue to pore over the Budget details.

Trade Secretary Patricia Hewitt rejected the attacks, saying UK companies wanted the extra healthcare investment because sickness was costing them huge amounts each year.

The 'wrong line'

Mr MacLennan's warning to the chancellor came in a letter to the Financial Times.

Mr Brown and Tony Blair should realise urgently that "they have drawn rather close to the line where foreign banks will choose a location other than London", he says.

Business will go abroad, predicts Mr MacLennan, first through assets being moved and then income going abroad.

Digby Jones warns of a "tax on jobs"

Those developments will increase the costs of being in London and make locating in the City uneconomic, he argues.

"Our competitor countries must be laughing in anticipation," adds Mr MacLennan.

Digby Jones, director-general of the CBI, also criticised the tax changes included in Wednesday's Budget.

"Business will be dismayed across the United Kingdom because this rise in National Insurance contributions is a tax on jobs," Mr Jones told BBC Radio 4's Today programme.

'Fair'

Employers did not have to make profits to have to pay the extra charges - a difference from the way a National Insurance rise affected employees.

But Trade Secretary Ms Hewitt insisted the 1p increase in NI was a "fair way to get this enormous increase in the NHS".

"Sickness is costing UK business alone nearly £11bn a year so they, and almost everybody else in our country, knows that if we are going to get a really good health system we have got to pay for it," Ms Hewitt told Today.

Arguing that the costs on business were minimal, she stressed the health service itself as Britain's largest employer would only pay an extra £200m compared to a total £15bn wage bill.

The social insurance system used in France cost employers £60 a week, said Ms Hewitt.

So general taxation was the best way to fund better public services, she added.